If Excluding Time From CIRP Helps The Corporate Debtor To Revive Its Operations, Such Exclusion Must Be Allowed: NCLAT
The NCLAT Single Bench consisting of Justice M. Venugopal, Judicial Member in the case of Vinod Tarachand Agarwal held that if exclusion of time of CIRP helps to revive the operations of the Corporate Debtor and thus achieve the objective of the Insolvency and Bankruptcy Code, such exclusion must be allowed. The Appellant filed an appeal against the order of the NCLT, Ahmedabad...
The NCLAT Single Bench consisting of Justice M. Venugopal, Judicial Member in the case of Vinod Tarachand Agarwal held that if exclusion of time of CIRP helps to revive the operations of the Corporate Debtor and thus achieve the objective of the Insolvency and Bankruptcy Code, such exclusion must be allowed.
The Appellant filed an appeal against the order of the NCLT, Ahmedabad Bench which refused to exclude a certain period of CIRP despite the Resolution being passed by 100% voting share of the Committee of Creditors of the Corporate Debtor for exclusion of the period of CIRP for further 90 days as the properties of the Corporate Debtor had not been detached by the CBI and ED due to Covid-19 pandemic.
The Appellant contended that exclusion of the 90 days period from the CIRP of the Corporate Debtor would save the company from liquidation. It was also contended that there was a Prospective Resolution Applicant, who submitted his Resolution Plan and there was a likelihood of revival of the Corporate Debtor.
The Counsel for the Appellant stated that since it was pursuing legal proceedings to get attachment of the sole property of the Corporate Debtor lifted before various judicial forums, the exclusion of the time period would allow the company to revive. He also cited the case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta, wherein it was held that 'Adjudicating Authority or the Appellate Authority has discretion to extend the time of CIRP period even beyond 330 days in certain exceptional cases'.
The Tribunal accepted the contentions of the Appellant that these are exceptional circumstances and since the object of the Code is to revive the Corporate Debtor, the exclusion of 90 days period from CIRP should be done as it would help achieving the object of the IBC.